Texas Judge Issues Nationwide Injunction Against DOL’s Overtime Rule

A federal judge in Texas has issued a nationwide injunction blocking the Department of Labor’s rule requiring overtime pay for more than 4 million new workers.

Welcome News for Mid-Market Employers.

There is little argument: Labor Costs for mid-market employers in New England are usually either the 1st or 2nd highest costs of doing business. So any work to control, manage, reduce, or in some way optimize labor costs is mission-critical to HR and Finance.

That’s the name of our game. Control Labor Costs.

The 11/22/16 court injunction to the current administration’s massive change to O/T laws, that would have significantly increase Labor Costs of mid-market employers, was welcome news. But because it came at the 11th hour, most employers have already made the changes to their systems, policies, and procedures to accommodate the regulation.

So how are employers responding?

1. If you made the changes necessitated by the law, you may have found employees misclassified as exempt according to the current duties test. This is common. Reclassify these employees as nonexempt and pay overtime for more than 40 hours/week. Simple and compliant!

2. If you already made the changes up and down the org chart, you have a decision to make. Since it is an expensive change, you may want to go back to the way it was. We’ve also heard of negative feedback from employees that were once salaried that had to switch to hourly. They found the change a perceived demotion. Therefore, there are financial and cultural impacts to consider.

3. Above all, communicate clearly to employees. Perhaps make a presentation or an internal video using the dry-erase board or flip-charts, something simple and easy, that communicates the nuances associated with your unique business situation.

Remember that the proposed changes and the recent injunction are highly publicized. Employees may be generally well-informed but confused… Make sure your employees are clear on the direction that your organization is proceeding.

As always, payroll and HR is essentially a data engine inside the business that controls cost and drives profitability. The more the better when it comes to customized tools, reports, and dashboards to put in place to help optimize your labor costs. That is where we come in. Let us dig in to your systems, policies, and procedures. Even a 2% gain on multi-million-dollar payroll is worth the effort.